Biodiversity Net Gain Costs November 2026: CPS Report Lists BNG Among Burdens Making Up 57% of a London New-Build Price

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Government-imposed costs make up 57% of the minimum viable selling price of a typical inner London new-build flat, according to a Centre for Policy Studies (CPS) report covered by Property Industry Eye on 10 November 2026 [1]. The report names Biodiversity Net Gain (BNG) as one of the costs in its model, alongside affordable housing obligations, stamp duty and the Community Infrastructure Levy. The debate over biodiversity net gain costs in November 2026 comes a week after mandatory BNG reached major infrastructure projects, and three months after the first small-site exemption took effect. This article weighs the "cost burden" argument against the evidence.

Key Takeaways

• The CPS models two schemes: 100 inner London brownfield flats (£775,000 viable price versus £333,000 without government-imposed costs) and 100 Chelmsford greenfield houses (£535,000 versus £311,000). BNG's share is not broken out [1][2].
• The Home Builders Federation's 2026 sentiment survey puts the average additional cost of BNG at about £5,700 per home, with wide variation by site [3].
• Since 6 August 2026, sites of 0.2 hectares or less are exempt from the 10% BNG requirement. Defra expects this to remove around half of residential permissions from the system [4][5].
• A proposed exemption for residential brownfield sites of up to 2.5 hectares was consulted on until 10 June 2026. As of 11 November 2026, no government response has been published [5].
• Defra's five-year review of the Environment Act, published 3 November 2026, calls BNG "broadly successful for larger developments" but points to gaps on smaller sites [6][7].

What the CPS report says about biodiversity net gain costs in November 2026

The CPS is a centre-right think tank. Its report, "Easing the Burdens: How Government Policy Blocks New Homes" by Edward Donovan and Ben Hopkinson, argues that taxes, planning obligations and building regulations push the viable selling price of new homes far above where it would otherwise sit [1].

The figures come from two modelled developments. In inner London, 100 two-bedroom flats of 700 sq ft would each need to sell for about £775,000 to be viable, against a theoretical £333,000 without the modelled costs. That gap of £442,000 is 57% of the viable price [1][2]. In Chelmsford, 100 three-bedroom greenfield houses would need £535,000 each, against £311,000, a gap of £224,000 or about 42% [1][2].

The costs counted are affordable housing obligations, planning delays, stamp duty, corporation tax, the Residential Property Developer Tax, the Community Infrastructure Levy, BNG, and specifications such as balconies and second staircases [1].

"If it wants more homes it must make them more attractive to build.", Edward Donovan, report co-author, quoted by Property Industry Eye [1]

Shadow housing secretary Katie Lam backed the findings, saying it often "simply isn't financially viable to build the homes that we need", and called for reducing net-zero-related building requirements [1][2].

Two caveats apply. The report is a model of two illustrative schemes, not an audit of real ones [1][2]. And BNG's share of the 57% and 42% is not published, so readers should not assume it is a large slice.

How much does biodiversity net gain actually cost developers?

The CPS coverage names BNG without pricing it. Other sources do, and they point to a cost that is real but modest against the totals above. On a £535,000 Chelmsford house, £5,700 is about 1% of the viable price.

Source	Figure	What it measures
HBF BNG Sentiment Survey 2026 [3]	About £5,700 per home	Estimated average additional cost of BNG, from 92 respondents at over 80 companies
HBF BNG Sentiment Survey 2026 [3]	50% of respondents	Have cut homes on at least one site to make room for on-site habitat, some by up to 25%
Defra government response, April 2026 [4]	About 10%	Expected fall in demand for off-site units from the 0.2 ha exemption
Defra government response, April 2026 [4]	Around 50%	Residential permissions that previously needed BNG and are now expected to be exempt

The HBF figure is a survey of its respondents, and the federation says the cost varies widely by site type and by the units bought [3]. The figure is not trivial for an SME builder, but it puts the CPS headline in context.

Delay may matter more than the direct spend. In the HBF survey, 85% of respondents reported delays from additional ecological assessments, and 48% reported brownfield delays, mainly from limited supply of open mosaic habitat and watercourse units [3]. Finance charges run while a scheme waits.

The case that early surveys reduce biodiversity net gain costs

Defra's post-legislative scrutiny memorandum on the Environment Act 2021, published on 3 November 2026, reads differently. It describes BNG as "broadly successful for larger developments" and says developers are getting ecological advice earlier and building habitat retention into site design [6][7]. More than 10,000 hectares of created or enhanced habitat are now on the national biodiversity gain register [6].

The memorandum is candid about gaps: smaller developments and some site types have struggled, which is why Defra points to the 2026 exemptions [6]. It is a government self-assessment, not independent verification [6].

Where the two readings meet is on timing. The HBF finding that half of respondents cut homes to fit habitat on site [3] is often a symptom of ecology arriving late. When a UKHab baseline survey is done before the masterplan is fixed, the layout can avoid the highest-value habitat, keep hedgerows and mature trees in the retained column of the metric, and put new habitat where it costs least in developable land. When the survey follows the layout, the choice is usually lost plots or off-site units at market prices.

Infrastructure promoters face the same logic. Mandatory BNG for Nationally Significant Infrastructure Projects applies to applications submitted on or after 2 November 2026, using a "BNG boundary" that counts only habitats actually disturbed [8][9].

"Promoters should now be stress-testing schemes against the forthcoming regime.", Fiona Ross, partner, Pinsent Masons [9]

Exemptions and viability: the 0.2 ha threshold and the proposed brownfield exemption

Defra's response to its 2025 consultations, published 15 April 2026, confirmed an exemption for all development where the red-line site area is 0.2 hectares or less, unless on-site priority habitat is harmed [4]. The CLA's April summary expected commencement by 31 July 2026 [8]. In the event, the regulations were laid in July and the exemption applies to applications made on or after 6 August 2026 [5]. The self and custom build exemption was removed at the same time, and temporary development of five years or less became exempt [4][5].

For viability, the effect is uneven:

• Sites at or below 0.2 ha no longer carry a 10% obligation. Defra expects this to cover around half of residential permissions that previously needed BNG [4].
• Minor sites above 0.2 ha can go straight to off-site provision under the amended biodiversity gain hierarchy [5].
• Larger sites are unchanged: the 10% requirement, the statutory metric and the 30-year management obligation all still apply.

The brownfield exemption is the open question. Defra consulted on a targeted exemption for residential brownfield development with thresholds of up to 2.5 hectares, closing on 10 June 2026 [5][8]. In July it said it would respond "in due course" [5]. As of 11 November 2026 no response has appeared, so brownfield schemes above 0.2 ha should plan on BNG applying. The CPS London model is itself a brownfield flat scheme [1].

What landowners selling off-site units should watch

The exemptions shift demand as well as cost. The CLA warned in April that the 0.2 ha and brownfield exemptions together could cut off-site market transactions by up to 48% [8]. Defra's estimate for the 0.2 ha exemption alone is a fall of around 10% in demand [4]. The figures cover different exemption combinations, but the gap shows how uncertain the market is.

Supply is rising too: Savills data cited in the HBF survey showed 197 sites registered to sell units, up from 46 a year earlier [3].

For a landowner with a habitat bank, or land going into a Section 106 agreement or conservation covenant, three points follow:

1. Habitat type matters more than hectares. Watercourse and open mosaic units are scarce [3]; generic grassland units are not.
2. Location matters. The NSIP regime allows aggregated off-site gain in any affected Local Planning Area, except water impacts, which must stay within the catchment [8][9].
3. The 30-year management obligation binds the land whether or not buyers appear, so it must be costed before units are registered.

Practical steps for biodiversity net gain in November 2026

Check the exemptions first

Measure the red-line area. If it is 0.2 ha or less and no on-site priority habitat is harmed, the statutory requirement does not apply to an application made on or after 6 August 2026 [5]. Check the de minimis and temporary development exemptions in the same pass. Exempt schemes still face the NPPF, so an ecological appraisal may still be needed [8].

Commission the baseline survey before the layout is fixed

A UKHab habitat survey by a suitably qualified ecologist sets the pre-development baseline the statutory metric uses. Many habitats can only be surveyed in season, so a survey booked early stops a missed window becoming a year's delay.

Run the metric early and test on-site options

The statutory metric converts habitat area, distinctiveness and condition into units. Running it on the draft masterplan shows where retained habitat earns credit and where the layout destroys high-value habitat for little gain in plots. Defra plans to move the metric to a web-based platform [5][8], so the version used should be recorded.

Plan the 30-year management obligation

Significant on-site habitat must be secured, usually by condition or Section 106 agreement, with a management and monitoring plan running 30 years. In the HBF survey, 73% of respondents called those costs disproportionate [3]. The cheapest control is simple-to-maintain habitat and a monitoring schedule agreed before signing.

FAQ

Does the CPS report say how much BNG adds to a new home?

No. The coverage lists BNG as one of several costs in a model of two schemes, but does not break out its share of the 57% London or 42% Chelmsford figure [1][2]. The nearest published estimate is the HBF survey's average of about £5,700 per home [3].

Is the brownfield BNG exemption now in force?

No. The 0.2 ha exemption took effect on 6 August 2026 [5]. The separate consultation on a residential brownfield exemption of up to 2.5 ha closed on 10 June 2026, and the government has said only that it will respond "in due course" [5]. Until then, BNG applies to brownfield schemes above 0.2 ha.

Will the exemptions make off-site units cheaper?

The evidence is mixed. Defra expects demand to fall by around 10% from the 0.2 ha exemption [4], and the CLA has warned of up to 48% fewer transactions if the brownfield exemption also goes ahead [8]. Prices for scarce habitat types may hold up even if grassland units soften.

Conclusion

The CPS report has put biodiversity net gain costs back in the spotlight in November 2026, but the published figures do not show that BNG is a major driver of the gaps it models. The best available estimate, from the HBF's survey of its members, is about £5,700 per home, with delay and lost plots often mattering more than the direct spend [3]. Defra's own review calls BNG broadly successful on larger sites while conceding that smaller sites have struggled [6].

For developers, the practical response is unchanged by the politics: check the exemptions, get the UKHab baseline done before the layout is fixed, run the metric early, and price the 30-year management plan before signing. For landowners, it is to focus on scarce habitat types and cost the long-term obligation honestly.

Biodiversity Surveyors provides ecological surveys, UKHab baseline assessments, BNG metric calculations and protected species and habitat surveys across the UK. To discuss whether an exemption applies to a site and what a baseline survey would involve, get in touch to book a survey with the team.

References

1. Marc da Silva, "Housebuilding crisis deepens as government rules push up development costs", Property Industry Eye, 10 November 2026. propertyindustryeye.com.
2. Brit Brief, "Government costs add £442k to London flat prices, says CPS", Brit Brief, 10 November 2026. britbrief.co.uk.
3. Home Builders Federation, "Biodiversity Net Gain Sentiment Survey 2026", HBF, 2 April 2026. hbf.co.uk.
4. Defra, "Improving the implementation of biodiversity net gain for minor, medium and brownfield development: Government response and summary of responses", GOV.UK, 15 April 2026. gov.uk.
5. Defra, "Biodiversity net gain amendments and transitional arrangements published", Defra Environment Blog, 14 July 2026. defraenvironment.blog.gov.uk.
6. Planning Geek, "Environment Act review: Defra's post-legislative scrutiny memorandum", Planning Geek, November 2026. planninggeek.co.uk.
7. Defra, "Environment Act 2021: Post Legislative Scrutiny Memorandum", GOV.UK, 3 November 2026. gov.uk.
8. Susan Twining and Shannon Fuller, "Key changes confirmed to Biodiversity Net Gain", Country Land and Business Association (CLA), 17 April 2026. cla.org.uk.
9. Pinsent Masons, "Biodiversity net gain requirements extended from November 2026", Out-Law News, 22 April 2026. pinsentmasons.com.